On July 1, 2019, Prestige Communications acquired all of the voting stock of Southern Light Technologies for $300 million in cash. At the date of acquisition, Southern Lights shareholders equity accounts were as follows (in millions):

Capital stock	$26
Retained earnings	142
Accumulated other comprehensive income	5
Treasury stock	(1)
Total	$172

At the date of acquisition, Southern Lights inventories and property, plant and equipment had a fair value that was $2 million and $10 million lower than book value, respectively. It also had previously unreported brand names, valued at $60 million, meeting the ASC 805 criteria for separate capitalization. Southern Light reports inventories using FIFO, its revalued plant and equipment had a 10-year remaining life, straight-line, and the brand names are indefinite-lived. Both companies have June 30 year-ends.

Southern Light reported $20 million in net income and $500,000 in other comprehensive income in fiscal 2020, and declared and paid $2.5 million in cash dividends. Impairment testing at the end of fiscal 2020 reveals that Southern Lights brand names are impaired by $3 million and goodwill connected with the acquisition is impaired by $5 million in 2020. Southern Lights beginning inventory was sold during fiscal 2020.

Required

a. Calculate equity in net income of Southern Light, appearing on Prestige Communications books, for fiscal 2020. Prestige uses the complete equity method to account for its investment.

Enter answer in thousands (example: $20 million equals $20,000 in thousands).

$Answer

(in thousands)

b. Prepare Prestige Communications journal entries during 2020 to report its investment in Southern Light, on its own books.

Enter all numerical answers in thousands (example: $300 million equals $300,000 (in thousands).

Description		Debit	Credit
AnswerAOCICashCost of goods soldDividends-Southern LightEquity in OCI of Southern LightGoodwillInventoriesInvestment in Southern LightTreasury stock		Answer	Answer
AnswerAOCICashCost of goods soldDividends-Southern LightEquity in OCI of Southern LightGoodwillInventoriesInvestment in Southern LightTreasury stock		Answer	Answer
To record acquisition of Southern Light.
AnswerAOCICashCost of goods soldDividends-Southern LightEquity in OCI of Southern LightGoodwillInventoriesInvestment in Southern LightTreasury stock		Answer	Answer
Equity in net income of Southern Light		Answer	Answer
AnswerAOCICashCost of goods soldDividends-Southern LightEquity in OCI of Southern LightGoodwillInventoriesInvestment in Southern LightTreasury stock		Answer	Answer
To record equity in net income.
AnswerAOCICashCost of goods soldDividends-Southern LightEquity in OCI of Southern LightGoodwillInventoriesInvestment in Southern LightTreasury stock		Answer	Answer
AnswerAOCICashCost of goods soldDividends-Southern LightEquity in OCI of Southern LightGoodwillInventoriesInvestment in Southern LightTreasury stock		Answer	Answer
To record receipt of dividends.

c. Prepare the consolidation eliminating entries (C), (E), (R) and (O), required to consolidate Prestige Communications accounts with those of Southern Light Technologies at June 30, 2020.

Enter all numerical answers in thousands (example: $2.5 million equals $2,500 (in thousands).

Ref.	Description		Debit	Credit
(C)	Equity in net income of Southern Light		Answer	Answer
	AnswerAOCICashCost of goods soldDividends-Southern LightEquity in OCI of Southern LightGoodwillInventoriesInvestment in Southern LightTreasury stock		Answer	Answer
	AnswerAOCICashCost of goods soldDividends-Southern LightEquity in OCI of Southern LightGoodwillInventoriesInvestment in Southern LightTreasury stock		Answer	Answer
	Investment in Southern Light		Answer	Answer
(E)	Capital stock		Answer	Answer
	Retained earnings		Answer	Answer
	AnswerAOCICashCost of goods soldDividends-Southern LightEquity in OCI of Southern LightGoodwillInventoriesInvestment in Southern LightTreasury stock		Answer	Answer
	AnswerAOCICashCost of goods soldDividends-Southern LightEquity in OCI of Southern LightGoodwillInventoriesInvestment in Southern LightTreasury stock		Answer	Answer
	Investment in Southern Light		Answer	Answer
(R)	Brand names		Answer	Answer
	AnswerAOCICashCost of goods soldDividends-Southern LightEquity in OCI of Southern LightGoodwillInventoriesInvestment in Southern LightTreasury stock		Answer	Answer
	AnswerAOCICashCost of goods soldDividends-Southern LightEquity in OCI of Southern LightGoodwillInventoriesInvestment in Southern LightTreasury stock		Answer	Answer
	Plant and equipment, net		Answer	Answer
	Investment in Southern Light		Answer	Answer
(O)	Impairment losses		Answer	Answer
	Plant and equipment, net		Answer	Answer
	AnswerAOCICashCost of goods soldDividends-Southern LightEquity in OCI of Southern LightGoodwillInventoriesInvestment in Southern LightTreasury stock		Answer	Answer
	AnswerAOCICashCost of goods soldDividends-Southern LightEquity in OCI of Southern LightGoodwillInventoriesInvestment in Southern LightTreasury stock		Answer	Answer
	Depreciation expense		Answer	Answer
	Brand names		Answer	Answer
	Goodwill		Answer	Answer